Capital expenditure got a leg up by 33 per cent to Rs 10 lakh crore (trillion), which will be 3.3 per cent of GDP, to aid economic recovery at a time private investments are yet to show clear signs of revival and the government hopes to shore up demand and consumption in the economy.

This is higher than the capex allocation of Rs 7.5 lakh crore under the budget estimate for FY23. The revised estimate for FY23 capital expenditure stood at Rs 7.28 lakh crore.

“This substantial increase in recent years is central to the government’s efforts to enhance growth potential and job creation, crowd in private investments and provide a cushion against global headwinds,” finance minister Nirmala Sitharaman said.

“This will be almost three times the outlay in 2019-20.”

According to details provided in the budget documents, railway expenditure through budgetary support is estimated at Rs 2.4 lakh crore in FY24. This is 51 per cent higher than the FY23 revised estimates of Rs 1.59 lakh crore.

“This highest ever outlay is about nine times the outlay made in 2013- 14,” Sitharaman said in her speech.

The direct capital investment by the Centre is complemented by the provision made for creation of capital assets through grants-in-aid to states.

The finance minister also proposed to continue the 50- year interest-free loan to state governments for one more year to spur investment in infrastructure. Aurodeep Nandi, India economist and vice- president at Nomura, said:

“We expect growth to slow materially in FY24, owing to a mix of developed markets’ recessions and the lagged impact of tighter monetary policy, leading to nominal GDP growth more likely at around 8.5-9 per cent versus the government’s assumption of 10.5 per cent, which is likely to dent tax revenues.”

Aditi Nayar, chief economist, Icra, said: “The efficacy of the substantially enhanced allocation for the 50-year interest free capex loan for the state governments will ultimately depend on the speed with which they utilise these funds.”